Residential tourism and transnational land investment in Central America and the Southern Indian Ocean

Residential tourism in developing countries, sometimes referred to as ‘lifestyle migration’ or ‘retirement migration’, is on the rise globally. In most cases, relatively wealthy citizens from Europe or North America - but more recently also from emerging economies, such as South Africa or Brazil — move temporarily or permanently to tourist destinations in developing countries where they buy or rent property and enjoy lower cost of living, better weather, beautiful scenery and a more relaxed lifestyle. Residential tourism implies the explicit granting of land concessions and tenure rights to foreigners. Both the number of residential tourists and the size of the related land investments keeps increasing in various countries in Asia, Africa, Latin America and the Caribbean. There is also growing competition among the destination countries to ease access and conditions for residential tourists (Aledo, 2008; Van Noorloos, 2014; Bell, 2017). In Panama and Honduras, for example, the governments have eliminated laws that once protected coastal lands from foreign ownership (Mollett, 2015).

Land alienation through residential tourism in Costa Rica

Partly as a consequence of the political instability and violence in the region in the 1980s, tourism developed in Central America more slowly than in the nearby regions of the Caribbean and southern Mexico (Canada, 2010). Costa Rica was a notable exception with its relatively stable government and close economic ties with the US. Residential tourism investment in Guanacaste and Puntarenas provinces on Costa Rica’s Pacific coast increased dramatically following 2003, when the volume of real estate investment overtook tourism expenditures (Canada, 2010). Guanacaste province has seen several phases of historical land grabs, including (1) the Spanish conquest in the 16th century that wiped out the indigenous Chorotega civilisation, (2) transnational land acquisitions for cattle farming by North Americans in the late 19th century, which led to massive deforestation and instigated the introduction of private property rights and (3) large-scale land acquisitions for rice and cotton production by Costa Rican elites and US citizens in the 1960s and 1970s, which injected a speculative element into the local real estate market (Van Noorloos, 2014).

Following a major depression in the 1980s that affected the agricultural sector, the Costa Rican government invested heavily in improving its tourism infrastructure and tried to lure North American retirees into the country with generous tax incentives, which fuelled land speculation by foreign investors (Van Noorloos, 2011). Two thirds of the investments in the tourism industry are partly or fully financed by investors from the US and Canada, while collaborations between North American and Coast Rican investors are also common (Van Noorloos, 2014).

There is significant overlap between tourism, investment, and residency: short-term tourists often end up buying property and thereby become residential tourists on renewed visas; property owners rent out their property to short-term tourists, which turns many residential complexes into de facto hotels; shared ownership of properties is also common; and some investors buy properties without a single purpose, i.e. as holiday home, retirement property or simply as speculative asset (Van Noorloos, 2014). A number of transnational hotel chains, such as Hilton, Marriott and Sol Meliá have built a range of four-and five-star beach resorts with integrated leisure infrastructure to attract affluent tourists some of whom have turned into customers for second homes in the master-planned communities (Janoschka, 2009).

While the booming residential tourism industry has been a boon for the local real estate sector and speculative overseas investors, it is increasingly crowding out local small-scale tourism businesses, increasing low-paid employment and leading to greater inequalities. The global financial crisis of 2007/08 has also exposed the vulnerability of a sector that is highly dependent on North American economies and financial markets (Van Noorloos, 2014). In the post-crisis period, poverty and unemployment rates increased at a higher rate in Guanacaste province than in other regions; at the last national census of 2011, the poverty' rates in the residential tourism hubs Guanacaste and Puntarenas were recorded at about 30 per cent, compared to the national average of21.7 per cent (INEC, 2011).

For decades, Gosta Rica has benefitted from strong and protective state institutions and laws, including a robust environmental legal framework. However, the implementation and control of environmental and spatial regulations have become more deficient through investor-led tourism development in Guanacaste (Janoschka, 2009). Lack of political will and inadequate human and financial capacities have triggered a host of socio-environmental problems, such as compromised conservation policies and coastal zone privatisation (see Box 4.4) as well as excessive water exploitation and small-scale displacement (Van Noorloos, 2014).

Box 4.4 Land tenure and the undermining of coastal regulations in Costa Rica

In contrast to most other countries in Central America, the majority of land in Costa Rica is private property. However, the law on the maritime-terrestrial zone (Law No. 6043, Ley sobre la Zona Maritimo Terrestre (ZMT), of 1977) stipulates rules for the use and protection of the first 200 metres of coastal land: the first 50 metres is inalienable public land, and the remaining 150 metres is designated as a restricted zone owned by government property. In this zone, land concessions can be issued (5-20 years renewable), while construction is allowed only under strict conditions. The ZMT law is meant to guarantee that coastal land is used for public benefit, that the socially and environmentally vulnerable coastal areas are protected, and that tourism is developed in a sustainable way.

However, reality shows a different picture: government regulations on the use of coastal land are not adhered to. A real estate market for coastal land has appeared; concessions are granted to foreign tourism companies and combining concessions increasingly leads to land concentration. Privatisation of the public inalienable zone (the first 50 metres) due to a complicated historical land tenure situation or entry barriers to public beaches is another growing problem. Coastal communities with land use permits are claiming more secure land rights, but these have so far been denied.

Source: Van Noorloos, 2019, p. 4

While the agricultural sector remains the industry with the highest water consumption, the water demand of the resort and residential tourism industry is inadequately recorded. La Voz de Guanacaste, an online service for local residents and international visitors, maintains that the wells registered for human use in the province have a capacity to supply nearly nine times more than the daily water needed for ever)' resident of the province (Garcia and Segnini, 2014). Yet, in some places, there have been reports of increasing water scarcity and fierce competition between the tourism industry and the residential sector over water use. For example, in the district of Sardinal, the Playa Panamá aquifer has been salinised as a result of overexploitation by hotels, which left the local communities without water supply (Cañada, 2018). As Van Noorloos (2017) found, the struggle over water use and resource conservation in Guanacaste is highly gendered, with women playing leading roles in local resistance movements against the extractivist practices of residential tourism. Women and underaged girls have also been impacted by a rapid surge of sex tourism in the province (Mowforth, Charlton and Munt, 2008; Van Noorloos, 2017). While the majority of Guanacaste residents still appear to have a largely positive view of tourism, this sentiment could rapidly change if the unbridled expansion of the resort and residential tourism sector continues.

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